Some Wolfspeed, Inc. (NYSE:WOLF) Analysts Just Made A Major Cut To Next Year's Estimates

The analysts covering Wolfspeed, Inc. (NYSE:WOLF) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the eight analysts covering Wolfspeed provided consensus estimates of US$898m revenue in 2024, which would reflect a measurable 2.6% decline on its sales over the past 12 months. Per-share losses are expected to explode, reaching US$3.93 per share. However, before this estimates update, the consensus had been expecting revenues of US$1.1b and US$2.19 per share in losses. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

View our latest analysis for Wolfspeed

The consensus price target fell 9.0% to US$59.28, implicitly signalling that lower earnings per share are a leading indicator for Wolfspeed's valuation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would also point out that the forecast 2.6% annualised revenue decline to the end of 2024 is roughly in line with the historical trend, which saw revenues shrink 2.4% annually over the past five years Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 14% annually. So while a broad number of companies are forecast to grow, unfortunately Wolfspeed is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Wolfspeed. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Wolfspeed's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Wolfspeed going out to 2026, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.